Discussions about whether we need a new War on Poverty paint a picture of increasing inequality and worsening poverty in the U.S. that could only be solved by more federal-government intervention. Calling for a new War on Poverty overlooks the larger history of economic growth and the real gains in the living standards of poor Americans since the Johnson era.
Market innovation has helped the poor the most, while government-funded wars on poverty have largely turned out to be wars on the poor’s upward mobility.
The cheerleaders for this new war argue that the War on Poverty was successful but not successful enough.
However, the successes that most point to were already taking place long before the beginning of the Johnson administration. Infant mortality rates, for example, have been falling since the early 20th century. Even a cursory look at the U.S. poverty rate shows dramatic declines in the years leading up to the late 1960s and a much smaller rate of decline since then.
The real credit for these gains goes to the enormous economic growth of the 20th century, which was driven by the competitive marketplace.
Even since the early 1970s, poor Americans are living better than ever.
In 2005, U.S. households below the poverty line were more likely to own any number of standard consumer goods than were poor families two decades earlier. They were more than twice as likely to own a dishwasher than in 1984, almost twice as likely to have air conditioning of some sort and more than seven times as likely to have a microwave oven.
In absolute terms, nearly 73% owned at least one car, roughly two-thirds had a washer and dryer, and almost half had personal computers and cell phones.
Poor U.S. households in 2005 were more likely to have these sorts of items in their homes than was the average U.S. household in 1971. The poor in America today own cell phones and personal computers, devices analogous to early color TVs, which were owned nearly exclusively by the very rich in 1971.
Contrary to the official figures, the war on poverty has mostly been won, but not by the big spending of the federal government.
Instead, it is the slower and less visible, but no less real, effects of the innovation and competition that accompany market economies that has given poor U.S. households a standard of living that would be the envy of kings throughout history.
Of course, real poverty remains, especially in urban America. The solution to that poverty is not more government. Rather, there are three ways we could tap into the very forces of market innovation that have produced the long-run gains in human well-being.
First, eliminate all minimum-wage and occupational-licensure laws.
These laws cut the bottom rungs of the economic ladder off from those who lack the skills or capital to justify the higher wage or pass the licensing requirements. Minimum-wage laws make it prohibitively expensive to hire lower-skilled workers, preventing them from getting the very basic job skills they need to move up that ladder. Licensure laws were created to shut the poor and nonwhite out of the marketplace, and they have, unfortunately, succeeded.
Second, open up the public schools to competition. Urban public schools are not just ineffective; they are destructive of human capital. Throwing more money at them hasn’t worked, and it’s time to give poor Americans, especially poor families of color, the opportunity to get the education they deserve by making schools actually compete for students.
Finally, end the War on Drugs. The culture of violence of the drug war, along with the way that it has driven out legitimate businesses from poor areas, have done a great deal to impoverish Americans, again especially Americans of color. In addition, it has destroyed families by arresting people, disproportionately poor and nonwhite, for something that is a victimless crime. Legalization would take the profit and violence out of the drug trade and make poor urban areas increasingly inhabitable for businesses and families, enhancing upward mobility.
We cannot afford a a new War on Poverty any more than the real wars we have been fighting. We need to recognize that the real increases in the standard of living of poor Americans of the last few generations were the result of the competition and innovation inherent in market economies, and encourage more of the same, instead of allowing government programs to continue to make matters worse for the poor in America.